Oakshire Brewing Strategic Marketing Analysis

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Oakshire Brewing

Oakshire Brewing, founded by the Althaus’ brothers in 2006, is a 15 barrel production brewery located in Eugene, Oregon. Starting out with the brothers brewing at home Oakshire grew to an organization of 20 employees, brewing award winning craft beers. What makes this company especially interesting are not only the products it brews, but the culture and values the organization has preserved during its growth.^[1]

Targeting consumers of beer in general, Oakshire operates in a highly competitive environment filled with local and national breweries of various sizes ranging from small craft breweries like itself to big corporations like Anheuser Busch or Miller-Coors. Focusing on the craft brewing sector in the Pacific Northwest, Oakshire competes with many, in most cases larger and in other cases more recognizable due to longer history, Oregon based breweries.

Unlike larger breweries, Oakshire focuses on all natural ingredients, brewing excellence and is embedded strongly in the local community. Business, currently, does not focus on economies of scale and market expansion, but rather to build a brand around the local craft beer culture in Eugene as well as other areas in the Pacific Northwest. That said Oakshire is available for purchase at multiple retailers and through different channels, besides being sold locally in Eugene including an own Public House. A strong relationship with the final customer is being realized through beer tastings, brewery tours and classes offered at the premises as well as in other locations, including the Portland metropolitan area.

The brews are competitively priced, while reflecting the high quality offered, within the craft beer segment and the variety of styles matches most competitors, including seasonal brews and special issues. Most craft breweries in the market do have a restaurant or bar to market their product through, thus where Oakshire really stands out is their communication and positioning. Staying close to the local community and consumers, Oakshire connects not only through events and offerings of on-site experiences, but also by sharing the culture as well as sustainable and local production, seeing brewing as an art more so than a business.

External Environment

Rogue Ales, a comparable competitor founded 1988 in Ashland, OR, had established its position in the craft beer segment when Oakshire entered. Oakshire values strength, independence and community, and Rogue Ales seem to adhere to similar values. Rogue Ales focuses on creating a variety of preservative free beers resulting in at least 60 different brews^[2]. Oakshire differentiates itself focusing on brewing excellence considering the craft an art, while staying close to proven concepts and recipes. Both breweries are active in their community, value natural ingredients and produce craft beers, but Oakshire stays true to the roots aiming for perfection, while Rogue, as the name might indicate, goes new ways in telling their story.

Oakshire manufactures (brews) craft beers, but also sells directly to stores and consumers, either through their offices or their public house. They work with suppliers of hops and other raw materials to feed their process, of which Oregon offers a variety to pick from, as well as retailers including bigger chains like Safeway. The value add that Oakshire provides is clearly through the brewing process, followed by the public houses direct to consumer offering and their marketing activities within the Pacific Northwest, that can also drive sales for their partners.

Barriers of entry for new entrants in the craft brew industry are rather low. The brewing process in general can be replicated to a certain extent, as well as the way that product is brought to the consumer.  (Rating: 8) Initial investment to enter the market is low, depending on the amount of barrels to be produced, thus exiting the industry comes at similarly low costs. Existing rivalry, strong within the industry, can be seen as a barrier of entry that has to be passed before gaining initial brand recognition. By the middle of 2014 the number of breweries in the US has reached over 3,000 of which 99% are smaller or craft breweries.^[3] (Rating: 10) Suppliers do not have the innovative power a brewery has as they provide a simple raw material product, thus can be seen favorable to Oakshire. (Rating: 3) On the other hand customers, especially retail chains that can account for a large, thus risky, percentage of a brewery’s net sales can have a higher impact on Oakshire. (Rating: 6) Substitute products are unlikely to enter the industry, as beer has a unique position in the beverage market, unless government intervention would steer away from alcoholic beverages or from beer or it’s ingredients in particular in the future. (Rating: 2)  Being able to sell directly to the consumer and to charge a more premium price point, compared to larger breweries, is driving profitability for breweries of Oakshire’s small size. Existing Assets cannot be turned around into Sales a multitude of times as the volume of product is limited dictated by the quality focused process and given brewing capacity, thus the profit margin of each unit needs to be maintained at a high level.[pic 3]

American made beer is not a new trend; with the modern era of American beers reaching all the way back to 1812. After highs and lows the American brewery sector shrunk to just 80 breweries belonging to 51 independent companies. Most of which only offered pale lager style ales.^[4] Oakshire operates in a segment of this industry characterized by constant innovation and variation in tastes. Thus the product life cycle of craft beer should be seen from the point of recovery back in the late 1900s up until today, where craft beer has reached mass appeal and seems to slowly move out of the growth into the maturity phase. More and more craft breweries are brewing a variety of drafts, and similarities between these prior unique styles across breweries become increasingly noticeable. This leads to the impression that craft beer will reach maturity in the mid-term as it is becoming a mainstream alternative to large corporations brewing mainly lager or pilsner style ales.

Oakshire itself, introduced less than 10 years back, has successfully entered industry and established a strong, yet small position. Becoming available through more and more large retailers, like Safeway, Oakshire is entering the growth stage with strong momentum. Oakshire has the opportunity to not only grow with the growing segment, but also outgrow competition building on the current momentum.

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Looking at the brewing industry and seeing craft brews as the segment competing with mainstream brews, a possible S-Curve can be inferred. As the demand for mainstream brews peaks and possibly enters decline, craft beer breweries taking over market share from large corporations, could lead to an S-Curve or even keep the craft beer segment flat while the traditional mainstream beer segment enters decline.